There are three levels of development interventions. The first is at the structural level, which includes broad programs of societal change. The second level deals with the government. The third level is at the grassroots, the community base.
All these dimensions intertwine. Thus, interventions at the structural level must take into account meso and micro issues. The same applies to those working at the micro level. Without a clear picture of the opportunities and constraints existing at higher levels, one cannot accomplish a successful intervention at the lower levels.
Pamela Aall of the U.S. Institute of Peace, uses Cyprus, Korea and Sri Lanka as examples of how sometimes third parties can make things worse, not better.
Interventions at the structural level are meant to provide broad societal change. They are typically applied to post-conflict situations, however, such interventions can also be applied to countries that have not suffered through violent conflict. This is the case for failed states, those that lack a political and social basis for national reconstruction. However, macro initiatives may be, and in fact frequently are, applied in developing countries that have not faced violent conflicts recently and are not failed states.
Macro-level interventions range from building infrastructure to the establishment of the foundations of democracy. Here, the field of development studies is very similar to conflict theory, especially the theory of peacebuilding. However, while peacebuilding focuses on preventing the conditions that foster violent conflict, development focuses on the structural conditions that prevent growth and equity (and hence lead to conflict).
Only recently, the field of development studies started to consider the effects of violence when designing, implementing and evaluating development objectives. This link was clearly stated in a 1998 report from the Carnegie Corporation:
Most wealthy nations do not yet perceive distant civil wars and the occasional complex humanitarian emergencies they cause as a serious threat to their own security, but these wars have become a moral concern, a political distraction, and a rising financial burden. Among developing countries and the newly independent states of the former Soviet bloc, these political disasters are causing enormous human hardship locally and are generating millions of refugees and various other social, economic, and political disruptions. These tear at the foundations of regional and international order. They also cause the destruction of billions of dollars worth of investments by the World Bank and other development agencies, and large amounts of scarce foreign assistance now must go for relief and reconstruction, rather than for more productive purposes. 
A recent study not yet published by the Center for Development Studies, at the University of Oxford, investigated the political economy of war. Countries studied included Mozambique, Sudan, Liberia, Sri Lanka and Nicaragua. "A major finding of the research," says the report, "is that much of the suffering during conflict is due to indirect effects of conflict on the economy and society, rather than to the actual fighting." So, here is a reverse association, from conflict to the economy, which then leads to further conflict.
One way in which wealthy nations can cause conflicts in other countries is through unbalanced international trade relations that can be framed as rich/poor conflicts. Another way is the influence of international finance mechanisms such as the World Bank and the International Monetary Fund (IMF).
The internationalization of capital markets made developing economies vulnerable. Speculators invest large sums of money on the interest rates paid by Third World countries in order to attract the foreign currency needed for investments. Without knowing local realities, financial brokers transfer millions of dollars out of developing countries at the first indication of financial risk. Even if these indicators are quite imprecise, they are the only tool international investors can rely on to make decisions. However, as money flows away, developing countries need to increase their interest rates in order to get the money back. By doing this, developing economies are getting more and more indebted and, consequently, have less money to spend on local needs.
These problems are exacerbated by the IMF's structural adjustment program rules. The Fund demands that developing countries achieve a certain level of surplus in the public sector, which is measured by simply deducting total public expenditures from total revenue. The IMF does not differentiate between different kinds of expenditures. Military expenditure is treated equally to primary education or basic health expenditures. Because of that, countries receiving IMF funds tend to cut money from social areas and invest only in areas that are considered to be "productive" investments--those that can generate quick economic returns. These are typically not social investments which take time to produce benefits. By failing to allow countries to make social investments (areas that are more prone to conflict), this economic orthodoxy can undermine both the capacity and the legitimacy of the state and the success of development efforts over the long run. 
The links between capitalism, development and conflict have been largely overlooked by those working in the field of conflict studies. This has been noted by Richard Rubenstein who argues that there is a longstanding taboo that prevents the correct understanding of how and to what extent "ethnic, racial, and religious conflicts are generated or exacerbated by dysfunctions of the free market system."  Settlement of such conflicts, Rubenstein argues, requires an implicit trade-off between political and socioeconomic demands. The author goes on to conclude that if there is no aspect of conflict linked to structural conditions, only mild reforms would lead to settlement. Otherwise, one may speculate, only major changes to such structures would allow for conflict resolution.
Rubenstein's view is certainly crucial, but could be extended to include some other important links beyond ethnic, racial and religious conflicts. There is a great deal of cynicism in the development discourse about free-market "convictions." In reality, free-market dysfunctions are the underlying cause of a broad range of conflicts.
For many, the 1980s and 1990s were decades of increasing wealth. The world economy was growing, as was international trade. However, at the same time, the gap between the rich and the poor was growing wider and the number of people living in poverty world wide was increasing. While maintaining the discourse of free-market and free-trade, industrialized nations kept their more sensitive domestic markets -- such as agriculture -- under state protection. At the same time, they demand an overall liberalization of the economic, financial and commodity sectors from developing countries.
Good evidence is now available that market-led reforms have diminished both economic outputs and standards of living in developing countries. Whether this is just a short-term downturn in a general trend of sustained economic growth, as neoclassical economists argue, remains to be seen. But consensus is now growing that "sustained economic growth can only be strengthened by poverty abatement, greater equity, more robust institutional arrangements, and a deepening of substantive democracy"  The way to these reforms, however, may be blocked by local and foreign interests that receive political and economic advantages from poverty, inequality, lack of strong institutions and fragile governments.
This is not to say that developing countries should not be responsible for their own poor economic performance. However, current structural economic measures prevent those countries, which are trying to achieve economic growth and social welfare, from succeeding. By acting like this, international institutions such as the IMF are fueling conflicts in developing countries. The final result of this, as pointed out by the Carnegie Corporation, will be that local and national conflicts will escalate to the point that they harm the entire world system, not just their local area.
Yet these countries have been pushed into global markets, even if those social, political and institutional preconditions-conditions for sustained economic growth were not present. So what seems to be present in today's globalized capitalism is a sort of Catch-22, in which developing countries are required to adopt free-market economics in a market that is not free for them. This situation undermines sustained growth and reduces Third World countries' revenues, which forces cuts in a state's expenditures and prevents state efficiency, undermining that society's institutions. It also allows space for corruption, free-riding and the undermining of property-rights, which are essential to the effective functioning of free-markets. This forms a vicious circle. As Bardhan (2001: 284) notes:
...the institutional arrangements of a society are often the outcome of strategic distributive conflicts among different social groups, and inequality in the distribution of power and resources can sometimes block the rearrangement of these institutions in ways that would have been conducive to overall development.
Here we have again similar conditions to the Catch-22 in world economics. The peculiarity lies in the lack of strong institutions, which leads to conflict, which then creates institutional arrangements that perpetuate conflict and the whole situation prevents development. What then could correct such a situation to allow for both economic development with a minimal spill-over of conflict?
The answer, it is argued, should include actions in a number of settings that are mutually reinforcing: institutional, economic, social, cultural and political changes all need to be implemented if effective conflict settlement, transformation or resolution is to occur.
At this level, development interventions aim at shaping developing countries' operational capacity, which includes both technical and political aspects. A recent study from the U.S. National Bureau of Economic Research found evidence that countries which experienced the largest economic decay after 1975 were those which were highly divided (measured by proxies such as income inequality and ethnic fragmentation) and had weak institutions for dealing with conflict (measured by the existence of democratic rights, law enforcement capacity, social safety nets, and good governmental bodies). 
Clearly, a major source of development failure is the lack of working democratic institutions. Institutions may be defined as norms and values of a society, together with those organizations that are capable of changing and promulgating those norms and values. The state, the market, and the civil society are major players in shaping and reshaping society's institutions, thus they are critical players in successful development. The institutional setting further includes economic market conditions, the legal framework, public policies, respect for human rights and various other dimensions.
Central to building strong institutions is the stability of a country's democracy. Without democratic institutions that can guarantee minimum standards of transparency from the government, the level of trust in any given society is generally low.
One additional way of measuring institutional fragility is the "Corruption Perception Index," measured by Transparency International. Though this index is not precise, it does provide a standard that reveals how the local society views itself. Although, corruption may also occur in countries with strong institutions, it is more frequent in countries with fragile institutional frameworks.
While the institutional economics approach to corruption recommends fostering state capacity, neoliberal-liberal economics (often adopted by the radical right in politics) suggests the opposite. For some authors, such as Joseph La Palombara, the state is not only inefficient, but also essentially corrupt. He argues that the larger the participation of the state in the GDP, the larger the expectation that corruption will take place.  However, this perspective ignores corrupt behavior that takes place in the private sector.
This debate reflects a major theme in meso-level development, which is the role of the government in development. Neoclassical-classical economists defend a minimum state. Institutionalists support a state that has the necessary size to be efficient and is able to exert its mandate with (good) governance. Governance can be understood as a way of doing democratic and good (rational) public administration, in a way that respects people's preferences, taking into account the will of vulnerable groups that cannot make themselves represented or heard.
Good governance is paramount for achieving legitimate public participation, and therefore fostering dialogue. Participation, however, is more than public consultation. For the United Nations Development Program (UNDP), it entails three other overlapping dimensions: dissemination of information, gathering of information, and empowerment.
Strong institutions are also fundamental for conflict transformation. It is not possible to effectively bridge different groups in society, such as the elite and grassroots, without stable and mutually accepted norms and values. In other words, institutions are the basis through which the rule of the law can be exercised. Without legitimate law, justice cannot be effective. Without minimum standards of social equality, which depends on governments' social expenditure, it is difficult, or impossible, to guarantee principles of justice and fairness.
Meso-level development, however, also implies conditions of governability. This differs from governance in the sense that governability refers not to (good) government, but rather to systemic conditions of public administration. Governability is close to what is called in Britain "value for money," that is, the standards of efficacy, efficiency and effectiveness that should guide public administration. Efficacy refers to the parameters of decision making. A government has efficacy if it is able to reconcile technical, bureaucratic and political dimensions in the decision-making process, so the best alternative has a better chance to emerge.
- Efficiency refers to the allocation of adequate conditions to implement the decision, what should be accomplished in due time.
- Effectiveness refers to the final accomplishment of the goal intended.
Of course, a decision that is based on efficacy and efficiency may not reach its goals because of unrelated intervening factors.
If all conditions are in place, then a public administration has the basis for governability. But it is the democratic and transparent exercise of governability that brings about (good) governance. Unfortunately, third world governments are facing enormous operational difficulties due to reduced budgets and lack of trained personnel. In many countries, it is the worst period ever. State governability and governance is tremendously reduced, and therefore its capacity to deal with conflicts is likewise diminished.
In addition, the lack of financial resources and personnel leads to "state capture." This situation is defined by the World Bank:
Formal institutions are crossed and controlled by a network of people who interchange favors and use the government for their own interest. In order to control or distort public policies, these networks maintain public management at a very low level. Money flows are especially difficult to control, and mis-allocated resources tend to end up in secret bank accounts. In this context, democratic representation is seriously distorted. The poorest, especially those living in developing countries, are not represented by the public institutions, because they cannot afford to buy decisions. These institutions, which theoretically represent the interest of every citizen are captured by elites that have direct access to their decision-making processes. 
There are, of course, different levels of capture. But even when the state is not captured, it may face enormous constraints due to lack of financial resources and trained personnel. The fragility of the state is so serious in many third world countries that many international aid agencies have started to finance their interventions alongside normal public procedures. With the consent of public administration, international agencies create "projects" that work according to the administrative procedures of international agencies -- not the host government.
This creates a clash between public servants and consultants who are hired for such projects on a permanent basis. Working side-by-side and eventually doing the same tasks, they receive very different salaries. This generates distrust between public bodies and international agencies. Above all, by doing this, international agencies encourage and allow consultants to negotiate public policies, which causes problems for the policies' legitimacy. In addition, there is a clash between the public servants' and consultants' priorities and methods of intervention. This is further complicated by the fact that there are no clear division lines between interventions aiming at development, reconstruction, relief, reintegration, and reconciliation.
It is probably at the micro-level that development interventions may face more difficulties and conflicts that are fully intractable. This is because conflicts somehow trickle-down and interact. Also, there is typically less expertise and resources to deal with the conflictive situation at the local level. Though it is often assumed that wars (macro-level conflicts) are the more difficult to resolve than local disputes, local people in developing countries face such high crime rates that the effects resemble a war, or even worse.
Despite this, the development field has paid little attention to these conflicts, or to those being created by development interventions. At the local level, development aid is mostly directed at poverty alleviation and environmental protection. Even so, "chronic poverty and violent conflict have, in the main, been treated as separate spheres of academic inquiry and policy... Development policy needs to be better attuned to the links between the two, in order to respond to the challenges of growing conflict and chronic poverty." 
Trying to reach the poor, development aid has by-passed the state. Governments are seen as ineffective, corrupted and/or captured. So international donors prefer to work with international and local NGOs. With the state power reduced and its intervention capacity undermined, civil society has often inherited the responsibility to provide what are usually state services, especially in areas of social policy that are not profitable.  While education in developing countries has been market-privatized, the welfare system has been "NGO-privatized."
NGOs have grown so much that, sometimes, they are more important than government in development work. During the 1990s in Mozambique, the total budget controlled by international NGOs working in the country was greater than the national budget. In many developing countries, NGOs control more resources than local administrations. Since structural adjustment programs (SAP) began, NGOs have assumed duties that may go well beyond their legitimacy and their intervention capacity. In many instances, duties have also been transferred to the private sector and the Global Compact, a UN-organized initiative to promote the social responsibility of private companies.
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Use the following to cite this article:
Barbanti, Jr., Olympio . "Development Interventions and Conflict." Beyond Intractability. Eds. Guy Burgess and Heidi Burgess. Conflict Information Consortium, University of Colorado, Boulder. Posted: August 2004 <http://www.beyondintractability.org/essay/development-interventions>.